Improving Profitability No Matter What Rates Do...Moss Adams 17th Annual Community Banking...

Moss Adams17th Annual

Community Banking Conference

Improving Profitability No Matter What Rates Do

– Living Process Improvement

Presented by Rob Johnson, EVP/Principal

ABOUT C. MYERSThink to differentiate. Drive better decisions. We have the experience of providing actionable

decision information to over 550 credit unions• 50% of those over $1 billion in assets• 25% of those over $100 million in assets Process Improvement, Project Management,

Strategic Planning, A/LM, Model Validation, Strategic CFO Bootcamp

Facilitate 130+ strategic engagements each year

Source: This Latest Camera Sales Chart Shows the Compact Camera Near Death, PetaPixel, 03/03/17

LINEAR VS. EXPONENTIAL CHANGE

WHY IMPROVE A PROCESS? Speed and Convenience Better customer experience Generate more revenue Better employee quality of life Fewer errors Reduce expenses

FUNDING MORE OF THE APPROVED LOANS

FUNDING MORE OF THE APPROVED LOANS

FUNDING MORE OF THE APPROVED LOANS

MAKING PROCESS IMPROVEMENT A HABIT1. Eat, breathe, and live process improvement 2. Clear objectives3. All teams experience it4. Eternal pursuit of non-value-add 5. Make improvements a reality 6. Make it stick7. Know your numbers

HIRING A PERSON TO HANDLEPROCESS IMPROVEMENT

WILL NOT ENSURE SUCCESS

SENIOR MANAGEMENTEAT, BREATHE, AND LIVE

CONTINUOUS PROCESSIMPROVEMENT

ALL IN IT TOGETHER

EXECUTIVE SPONSOR Assures project success aligns with

business goals Supports the team and removes

obstacles Manages business risk of project failure Acts as a vocal and visible champion

EVERY PROCESS IMPROVEMENTENDEAVOR HAS CLEAR OBJECTIVES

EXAMPLES OF OBJECTIVES

We have improved our consumer lending process

EXAMPLES OF OBJECTIVESNOT CLEAR:We have improved our consumer lending process

CLEARER:We have improved our direct used auto lending process

EXAMPLES OF OBJECTIVESNOT CLEAR:We have improved our consumer lending process

CLEARER:We have improved our direct used auto lending process, so that our funding ratio has increased from 63% to 68% by June 30, 2018

BE OPEN TO WHAT YOU DISCOVER

ALL TEAMS AND LEVELS IN THEORGANIZATION EXPERIENCE IT

AS-IS MAPPING

IDEAL MAPPING

HOW IS THE TEAM SELECTED? People who do the work need to be involved in the

process improvement:• Tell us how it really is• Creative ideas on how to make it better Decision-makers need to:

• Listen with an open mind• As appropriate, make “in-the-moment,”

“low-hanging fruit” decisions• Be committed to implementing agreed-upon

improvements in the process, timely

HOW ARE PARTICIPANTS SELECTED? Lending example: People who do the work need to be involved, such as:

• Loan originator • Underwriter• Loan processor

Compliance

Manager who knows process from start to end

Business owner

EVERYONE IS IN THE ETERNALPURSUIT OF NON-VALUE-ADD

PROCESS IMPROVEMENTNon-Value-Add Or Value-Add?Non-value-add (NVA) activities usually meet one or more of the following criteria: The activity has no customers, internal or external Customers/members are not willing to pay for it The activity is not required for financial, regulatory, or

other business reasons

All other activities are value-add.

be curious

why 5

You need to be part of the solution

WHY TO THE POWER OF 5 Funding of A+ loans is 63% Customers got loans somewhere else – Why? Customers waiting for decision – Why? Lending busy with large number of denials that

need a second look – Why? Want to approve as many loans as possible – Why?

– Why?

PROJECT MANAGEMENT TO MAKEIMPROVEMENTS A REALITY

DELIBERATE FOCUS TOMAKE IT STICK

KNOW YOUR NUMBERS, MONITOR THEM, COMMUNICATE

SUCCESSES AND FAILURES

THE RIGHT COMMUNICATION Legacy processes are not protected Ask challenging/probing questions Demand feedback Talking works best More and more quality updates=higher

chance for success

MAKE YOUR NUMBERS COME TO LIFE

APPLICATIONS BY CREDIT TIER

Nearly all C-tier applications that are approved get funded

PERCENT OF ALL APPLICATIONS

FUNDING MORE OF THE APPROVED LOANS

FUNDING MORE OF THE APPROVED LOANS

FUNDING MORE OF THE APPROVED LOANS

*Example using A+ credit

TIME TO APPROVAL – BRANCH CHANNELS

*Example using A+ credit

TIME TO APPROVAL – DIGITAL CHANNELS

1. Eat, breathe, and live process improvement 2. Clear objectives3. All teams experience it4. Eternal pursuit of non-value-add 5. Make improvements a reality 6. Make it stick7. Know your numbers

MAKING PROCESS IMPROVEMENT A HABIT

Thank You!We welcome your questions and comments.

c. myers corporation800.238.7475cmyers.com

c. myers